Alan Greenspan is mystified by recent events.  For forty years he has been operating on the belief that businesses that sold complex financial products - really promises of future performance - would need inspire confidence in their customers. This need would lead them to behave prudently and honestly so as to maintain their reputations.

Mr. Greenspan appears to have forgotten about another usage of the word confidence: A confidence man is someone who inspires the confidence of the gullible in order to separate them from their assets. This usage appears to have originated in these United States and appears in the title of a novel by Melville The Confidence Man.

It simply never occurred to Mr. Greenspan that businesses might try to substitute some cheaper alternative commodity - plausible deceit - for the genuine article - reputation. He never stopped to think that they might expect to be well away from the scene of their crimes and enjoying their multi million dollars bonuses before the public discovered the fraud.

I think that he may also have been surprised to find that food producers in China were substituting melamine, a poisonous industrial chemical, for protein.

Now this would all be so much liberal snarking, another refrain from the carping chorus of blogging Cassandras, were it not for the fact that Mr. Greenspan's economic theory lives.

John McCain has proposed to dramatically cut the cost of health insurance by reducing demand. He will pressure everyone to buy individual policies at prices well below the current cost of group health insurance - group health policies currently cost over $12,000 for a family, McCain would have us spend $5,000. Any spending on group policies and any spending above this amount would be counted as taxable income.

To insure that there is a supply of inexpensive policies John McCain wants to deregulate health insurance. He would allow insurance companies to sell policies across state lines, meaning that the least regulated state would become the new health insurance capital of the United States.

But not to worry, Insurance is a complex financial product and insurance companies need to inspire confidence in their customers. The newly deregulated health insurers will need to behave prudently and honestly so as to maintain their reputations.